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Tuesday, June 25, 2013

There has been a great deal of talk in recent times about responsible gambling, which is perhaps largely due to the huge increase in popularity that it has enjoyed in the digital era – thanks to online casino sites and other internet gambling options. Indeed so seriously is this taken, that most online casino sites will now feature information about how to gamble responsibly, as the industry seeks to ensure that it remains an enjoyable way of spending leisure time, rather than a problematic addiction. At the heart of responsible gambling is the management of two things: finances and time.

The first of these is probably the most important, although they are arguably interlinked, as not being clear on how much you can afford to spend gambling each month will lead to financial catastrophe. If you intend to play at casino sites whether it is on the PC or through mobile sites like MobileCasino.co.nz – or any other type of online gambling – on a regular basis, then you must work out a budget based on your monthly income. Once you know exactly what you can afford to spend, there is a lot of sense in putting that money into a separate account, as this keeps the cash used for the likes of food and bills out of temptation’s way.

Unless you have a significant disposable income, your monthly gambling budget is likely to be tightly restricted, but the key to making it last through the month is to impose limits on the amount of time you can spend gambling each week. Aside from this, such time management is also crucial to ensure that gambling remains just one part of your life – rather than becoming an all-consuming obsession. Limiting both time and money available will also help you to avoid common mistakes like continuing to bet in the hopes of making up losses, which generally just leads to even greater losses. Furthermore, remaining sober while you gamble will also help you to retain the self-control to know when to walk away.

Tuesday, June 18, 2013

Two of the key search items that I have looked at when investing in Lending Club have been the "Verified Income" field and the "Review Status" field. Verified Income is particularly important to me because when gauging the likelihood of repayment, knowing how much a person makes is obviously very valuable information. While not as important, knowing whether a loan is approved already is very helpful--when you decide that you want to buy a note on a particular loan, you want that money to be invested as quickly as possible and not have to wait for Lending Club to finish its approval process.

Unfortunately, over the last few months, when I have been browsing notes on Lending Club, and I have limited my search by either of those fields, absolutely no notes return.

I might be able to explain away the fact that no notes have been approved by considering that perhaps Lending Club has been inundated with new notes and has therefore pushed back the approval process until after loans secure full funding, but I can't think of a single good reason why loans would not have verified income. While not all applicants had verified income previously, there were still a good number that did, and (to me, at least) it seemed very prudent to give those notes priority attention.

I did some tentative searching but was unable to come up with a reason for these searches coming up blank. One article from April of this year even suggested that we should start seeing more notes with verified incomes.

Fellow Lending Club users: did I miss an announcement of some kind? Why have already approved notes from loans with applicants with verified income disappeared from the Lending Club platform?

Sunday, March 3, 2013

If you’re struggling to free yourself from
debt, there are a lot of ways you can do so that may not readily spring to
mind. But in the UK
debt management has become big business as the whole
country seems intent on freeing itself from the burden of debt that was taken
for granted just a few short years ago.

In making savings to help reduce debt, it’s
important to remember that saving what might seem relatively small amounts of
cash each month can make a huge difference over time.

So here are five top tips to achieve your
goals:

1. Shop around for the best possible
mortgage. The current lowest-ever interest rates mean there are some great
deals around – so seek expert advice to make sure you have the best deal
possible.

2. Clear your credit card debts if you
possibly can. The interest rates on credit cards are generally very high.

3. Try to cut the cost of your household
bills. Make sure you’re getting the best possible deal for your gas,
electricity and telephone bills (including your mobile(s). The market is
constantly changing as companies introduce new schemes to lure in new customers.
The switched-on householder who’s prepared to make the extra effort can benefit
hugely from these deals.

4. Save on food shopping. The
discount supermarkets offer excellent value – and even shopping online can be
cheaper despite the delivery costs. This is because you aren’t as readily
tempted to buy the things that would tempt you from the shelves.

5. Sell the things you no longer use. Is
your home full of clutter you really don’t use or appreciate any more? If so,
consider selling it at a car boot sale or in the local paper – or on E-bay, the
online auction house. There’s always someone looking for something and you may
surprise yourself by how much money you’ll receive. This also helps psychologically
as you realize how little the things that may tempt you now will be worth in a
year or two’s time.

These are just a few of the way you can grow your savings which will gradually free you from the nightmare of personal debt.

Saturday, March 2, 2013

Part of living frugally is making sure that
you’re not overspending on necessities in life. There are lots of areas where
you can easily save money – if you’re prepared to do your research. One classic
example is home insurance. Nobody wants to pay out for home insurance, but it’s
not something you want to be caught without in case of a fire, flood or
burglary in your home.

To reduce the cost of home insurance, you
first need to make the effort to get a number of different quotes. You’ll then be
prepared to go back to your current insurer at renewal time and ask whether
they’re willing to match the lowest quote you’ve found to keep your business.

There are many different optional features
on a home contents insurance quote and not having these is another way you can make savings on
your annual costs. Each optional feature brings potential benefits, but it
really depends on how much you think you will have need of the features whether
you decide to add it to your annual costs for insurance or not.

Home emergency coverage is an extra feature
that many people choose to pay more for. If you have a home emergency, like the
boiler breaking down or the washing machine flooding, then home emergency coverage will mean that a tradesman comes to your home to deal with the problem within a
short time frame and that the cost of the repairs and parts will be covered up to
a ceiling amount.

Another extra feature on home insurance is
accidental damage coverage. This is particularly popular with households that
include young children and will cover you in the case of jam sandwiches being
shoved into the home entertainment system or blackberry juice being spilled on a
white carpet, for example!

Not everyone realizes that their contents
coverage only covers their possessions when in the home, so if you lose your
tablet or phone while out and about, your insurance doesn’t cover it. The only
way around this is to include personal possessions coverage on your contents
insurance, which means that items with you when away from the home will be
insured. Again, this is down to personal judgement whether the extra premium
costs will be worthwhile.

Look carefully at what you current home insurance covers and decide whether this is the right coverage for you. Then get some comparative quotes to check whether you're getting the coverage you want at the best possible price.

Monday, September 17, 2012

If you've ever carried a balance on a credit card, you've probably also considered setting up a balance transfer to "hide" that balance and not pay interest on it for a while. I don't know about you, but I receive a handful of balance transfer offers in the mail every month, and those "0% APR for 12 month" offers can be very tempting.

But hang on a second. Does it always make sense to transfer a balance from one credit card to another, even at 0% APR? Let's take a look at the fine print.

I was perusing just such an offer from Discover Card when I saw that the balance transfer charged a 5% immediate fee to facilitate the transfer. Big deal, you might say. If I'm being charged a 19.99% APR on another credit card, surely paying 5% instead makes more sense.

The problem comes from just how that interest is charged. As I stated, the 5% charge is immediate, but what you might not realize is that the 19.99% charge is spread out over the year. What does that mean in real figures?

If you transfer $1,000 to Discover, you will immediately pay a $50 fee to do so. This balance will not be charged interest for a year, however.

If you kept that $1,000 on the original card at 19.99% interest, you would only face an interest charge of $16.66 the first month. This is because while the interest is higher, the charge is then divided across the 12 months. Therefore, your monthly interest charge equals $1,000 X .1999 / 12 = $16.66. With this being the case, it would take over three months for that $1,000 on your original credit card to cost you in interest what you'd be paying immediately with balance transfer.

What should you do in this situation? It depends on how quickly you can afford to pay down this debt. If you think you pay an extra $333 per month towards the principal, it makes more sense to keep it on the original credit card (particularly since the interest will be reduced with each payment). If, however, you think you need to pay this amount down over the course of a year, then the balance transfer is the better option.

So what should be your takeaway? Balance transfers are the Trojan Horses of personal finance, and, in this case, it makes a lot of sense to look this gift horse in the mouth.

Wednesday, September 5, 2012

As you can see in the graphic to the right, I'm finally out of the negative return area with Lending Club. In fact, since the last time I posted an update, my returns have increased by roughly 5%. To make sure my returns increase, I've changed how I look at investing with Lending Club.

How, specifically, have I adjusted my investing strategy with Lending Club? Well, in the first place, I've increased the number of loans that I hold. As I mentioned before, having so few loans in the first place is really what caused the one default to affect my returns so grievously. As of today, I have 36 loans, all of which are current in their repayment. I do plan to keep investing more with Lending Club, but I'm holding off until I get a better sense of how much I'm going to be able to work when I go back to grad school in a few weeks.

The other way that I've changed my strategy is that I am much more vigilant now concerning late payment. As you may know (and as you probably know if you're reading this in the first place), Lending Club has a trading platform with which you can sell off any of your notes at whatever price you choose (assuming you can find somebody to buy them). The drawback is that Lending Club charges a 1% fee per note sold.

How exactly have I been more vigilant? Well, as soon as I notice that one of the people that I've lent to misses a payment, I put their note up for sale. I start the price at what is owed plus the current amount of interest, and I adjust that price downwards every few days until somebody purchases it. My thought is that it's better to get most of my money back on that note, even if I end up selling it for a loss. That is, a small loss is more appealing to me than the prospect of getting larger returns due to extra charges to the borrower that accompany late payment with the risk of a large loss (the entire value of the loan).

Perhaps I'm oversensitive on this topic, but after the one note defaulted (by someone who later filed for bankruptcy), I want to limit my risk with the notes as much as possible. As I mentioned, Lending Club does charge late fees for people who are late with a payment (which would mean extra money if the borrower brings themselves up to date with their payment), but I'm a happier person by selling the notes off and not having to worry about them.

What do you think? Am I too conservative in my Lending Club approach? Let me know in the comments.

Wednesday, August 29, 2012

When you start wearing Crocs all the time,it may be time to throw in the towel.

A recent study mentioned in the New York Times states that 35% of adults near retirement age expect to not retire at all. Their reasons for not being able to retire included, perhaps obviously, the need for the income that working provides and the insurance benefits that accompany working.*

I don't know about you, but whenever I read articles like this, I tend to reflect on the ideas put forth by personalizing those ideas. That is to say, how does this information affect me and mine?

To answer, let me start by stating that I'm pretty lucky to still have one set of grandparents alive and in relatively good health.** My grandpa still owns a laundromat which he continues to run at age 89 (though he relies more and more on my dad for the day to day duties). My grandma never really had a professional career, per se, though she did work various jobs in her life, and she also helps grandpa with the laundromat. So, while I suppose you might consider my grandma retired, my grandpa is not retired by his own choice.

And bully for him! If we're being honest, owning a laundromat is almost as passive an investment as running a business can be. Further, I don't know that grandpa needs the money that the business brings in at this point; while I'm not privy to all his finances, I don't think they're hurting. As an example, five years ago, grandpa bought the land his business is on, and three or so years ago, grandpa bought grandma a bigger house (as our family grows, so too do family holiday gatherings). In talking with grandma a few months ago, she seemed to think both of those purchases were pretty much paid off. For grandpa, continuing to have the business seems like it's his choice to help provide for our family even after he's gone.

With all that said, I wonder how many of the 35% of people in that survey are like my grandpa, who have sweet, relatively easy gigs?*** I suspect he's probably more of the exception.

However, when it comes to my parents, I don't think they're quite as set. My dad (69) retired a couple of years ago, but he still gets called in from time to time to his old work as well as helping out at grandpa's store. My mom still works during the school year. Again, while I don't know everything about their finances, I estimate that they have some money in retirement accounts, but what's there may not be enough to live on (for what I'm hoping will be a long time). On the plus side, they'll both get Social Security, and the house that they live in (that I grew up in) is nearly paid off.****

Still, I think my parents will probably be okay when they both retire. I know my mom could have started receiving Social Security benefits a few years ago, but it looks like she's planning on working at least one more year so her Social Security checks will increase.*****

So, I think that I'm in sort of lucky place. My family seems like it will be able to continue to provide for themselves into their twilight years. Still, I wonder if I should start saving a little extra money for my parents in the event that they run out of money.

What do you think? Are any of you planning on supporting your parents? Should you be? Should I be? Let me know in the comments.

*Not to get too political, but Obama wanted free healthcare for Americans, and, instead, we got legislation that says, "Buy health insurance or else we'll, fine, er, tax you." I have a hard time believing either party is happy with that outcome. After all, when not having health insurance is outlawed, only outlaws won't have health insurance. Maybe I'll drop off the plan I'm on so that I can get "Thug Life" tattooed across my chest.
**I'm very lucky in the case of my grandfather; three months ago it looked like he was going to die in a matter of days. His doctor told my family that he was just getting old and that his body was starting to shut down. It's worth noting that this is the same doctor that "missed" my dad's cancer. My parents eventually took him to the emergency room, where they, too, were unable to figure out what was wrong with him, but, not willing to give up, they took him off the various medications he was on, and he immediately regained strength and started to get better. The short of it is, a pharmacist had mislabeled grandpa's blood-thinning medication, and so grandpa was taking twice as much he should have been. The old saying is that blood is thicker than water, but it seems like there was a time for grandpa where water was thicker than his blood.
***I don't think it's 100% easy, though I do think the primary difficulty in starting a laundromat is the start up costs. Commercial washers and dryers aren't cheap, and they do need to be replaced eventually. That said, I do think the day to day aspects of running a laundromat are pretty easy.
****That said, a house as a retirement asset doesn't always seem like a great idea. After all, how many people lost 40% of their home equity in 2007-2008 that were hoping to retire? Also, if you sell your house, where will you live?
*****Eligibility for Social Security renews each year in January, so, for you extreme penny pinchers out there who are worried about your kid's retirement, you might want to start "getting busy" around March or April so you can get a January baby who will be able to suckle on the government retirement teat as quickly as possible. My dad with his December birthday had to wait nearly a whole extra year to retire.